As the world of telecommunications, computer networking, and electronics continues to expand, the world as we know it grows smaller. Sitting in the glow of a computer screen, an individual can instantaneously access information on the opposite side of the planet. As computing and interconnected communication capabilities continue to integrate into the daily activities of individuals, new and useful ideas bubble up to the surface. In general, many of these ideas take the form of converting a task, that has traditionally been performed manually, into an electronic commerce process. As an electronic commerce process, transactions that once took days and weeks to perform through the mail can be completed virtually instantaneously over the Internet or through other networking means.
Advances in technology usually precede changes in fields and disciplines that are ancillary to the technology. This phenomenon is apparent in the realm of legal issues regarding electronic commerce. One example of this phenomenon is in the area of electronic agreements. The Uniform Commercial Code (UCC), drafted by the National Conference of Commissioners on Uniform State Laws, is directed towards providing a uniform body of state law governing commercial transactions. Under the UCC, a chattel paper is a written instrument identifying a monetary obligation and a security interest in or a lease of specific goods. In many cases, the chattel paper will take the form of a negotiable instrument coupled with a security agreement. Section 9 of the UCC sets forth that a security interest in chattel paper is perfected by possession. In the physical world, possession is obvious—the holder of the signed original paper is in possession of the chattel paper. However, in the world of e-commerce, possession is not so obvious.
In cyberspace, where an agreement may exist in electronic form (i.e., electronic chattel paper), it is difficult to determine who has possession of an electronic chattel paper. It is an easy task for a party to create an identical copy of an electronic file and distribute that copy to others. In this situation, it appears impossible to identify which copy of the file is original, and thus, to identify who has possession of the original. However, from a legal perspective, it is necessary to be able to distinguish an original electronic chattel from a copy. Thus, there is a need in the art for a technique to maintain an original authoritative copy of an electronic chattel paper and to distinguish it from copies.
Currently, proposals to revise Section 9 of the UCC are under consideration. In general, these proposals are directed towards providing that a security interest in electronic chattel paper is perfected by control. The proposed revisions to the UCC, state that a party is considered to have control of an electronic chattel paper if the records comprising the electronic chattel paper are created, stored, and assigned in such a manner that: (1) a single authoritative copy of the record or records exists which is unique, identifiable and, except as otherwise provided . . . , unalterable; (2) the authoritative copy identifies the secured party as the assignee of the record or records; (3) the authoritative copy is communicated to and maintained by the secured party or its designated custodian; (4) copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the participation of the secured party; (5) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and (6) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision. Thus, there is a need in the art for a system and method to provide for the control of an electronic chattel paper that meets some or all of these requirements. There is also a need in the art for a system and method to create electronic agreements in a distributed environment, but maintain the ability to identify the party having control of the electronic agreement.
Therefore, it can be seen that there is a need in the art for a system and method that enables individuals to complete electronic forms, such as purchasing agreements, sign the electronic forms, and that provides secure management of the electronic forms to prevent tampering or modifying the forms once the interested parties partially or fully execute the electronic forms.